The Timken Case Essay

4273 WordsMay 21, 201118 Pages
| | ECONM2021Cases in Financial Management | THE TIMKEN COMPANY | (Word Count: 4000) | Candidate Nos.380843767942568 | | Executive Summary The Timken Company – a leader in the bearing industry, is considering acquiring the Torrington Company from Ingersoll-Rand. Torrington – an engineering solutions segment of the Ingersoll-Rand. The main motive of acquisition is to enhance Timken’s market share and product base. Operating synergies are highly expected from this merger with 80 million cost savings by the end of 2007. The presented analysis, recommends in our opinion, the best course of action in the proposed acquisition of the Torrington Company: * Both companies operate and compete in same business and therefore,…show more content…
Another serious concern is about Timken losing its investment-grade rating, therefore, an analysis of the affect of financing this acquisition with debt follows. Fit between both companies and Expected Synergies Both companies operate and compete in same business and therefore, Timken is seeking substantial operating synergies from this largest acquisition in its history. The motive behind this acquisition is to add potential value to Timken by combining both firms, preferably from operational sources. Timken expects the acquisition to be accretive to earnings per share. Timken's acquisition of Torrington, which had sales of $1.2 billion in 2002, creates the world's third-largest bearing company by increasing its global market penetration from 7% to 11%. It also expands the company's portfolio of automotive and industrial bearings-based products and service solutions. Torrington, a leading manufacturer of needle roller bearings, complements Timken's leading tapered roller bearings and alloy steel products. With this acquisition, Timken is increasing the size of company by almost 50 percent. And, Timken will continue to concentrate on what it do best by buying a company in an industry, where it has a leadership position built on decades of expertise. Timken expects to expand its worldwide business base with new products and services as both companies have only 5 percent overlap in their product

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